Crypto Trading Volumes by major Indian exchanges have plummeted since April 1, the day the new tax law went into effect, according to data collected by Crebaco, a crypto research organization.
The volumes of the four exchanges in India were collated by analyzing data on Coinmarketcap and data firm Nomics. The data shows a decrease of 72% on WazirX, 59% on ZebPay, 52% on CoinDCX and 41% on BitBns. Trading volume is in US dollars.
The Cryptocurrency Tax Law of India enforces a 30% tax on profits from cryptocurrency transactions effective from April 1, 2022, and does not allow to cover losses from other crypto transactions.
It is not yet clear whether the sharp drop in trading volume is due to the new tax law as data shows that the drop in volume on Indian exchanges is largely in line with global trends. But its negative effects are not disputed.
According to crypto attorney Suril Desai, it is unclear whether the reduced volume means that the transaction has dropped or moved elsewhere. “The only volume we receive comes from exchanges. Off-chain transactions can take place with no way of being recorded,” Desai said.
Sathvik Vishwanath, co-founder and CEO of Unocoin, another popular Indian exchange, said the new tax law is affecting the market. Everyone is affected by a 30% fixed income tax on cryptocurrencies. TDS (Tax Withheld at Source) 1% is affecting market makers and liquidity providers. Both are necessary for a better crypto ecosystem in India.